TL;DR
SaaS discounting is a necessity, but poor execution leads to revenue leakage and eroded buyer trust. This article explores how to avoid three fatal traps: a rigid “never discount” stance, nontransparent “hidden” concessions, and chaotic case-by-case discounting. Success requires a shift toward consistency and uniformity when discounting new customers, where discounts are earned through structured incentives rather than given at a salesperson’s discretion. Leveraging real-time pricing data platforms like LevelSetter empowers sales teams with “pricing fluency” to defend value and accelerate deal velocity
In the modern software landscape, discounting isn’t just a tactic—it is a fact of life. Sophisticated B2B buyers are well aware that the marginal cost of producing your product has already been paid and that your growth is largely predicated on customer count. Consequently, they enter negotiations expecting—and often demanding—generous concessions to help you land another logo.
However, the way you respond to this expectation defines whether your company scales or stagnates. At SPP, we often see executive teams iterating on every aspect of their operations while letting pricing—the most powerful lever for profitability—fall by the wayside. When discounting is handled without discipline, it creates a Wild West environment where no one can trust the numbers, and nobody truly wins.
Here are three common discounting approaches that act as anchors on your revenue growth and how to pivot toward a more sophisticated model.
3 Discounting Approaches That Slow SaaS Growth
1. The hubris of “We never discount!”
Some software leaders believe their value proposition is so superior that they can ignore market gravity. While protecting brand value is noble, a rigid anti-discounting policy often deprives you of the chance to prove your worth to potential long-term champions.
The Growth Risks
- Repelling Value-Conscious Prospects: You turn away buyers who like your product but see a misalignment between your prices and their specific use case.
- Shallow Deployments: To save costs, new customers may settle for a lower software tier that doesn’t meet their full needs. This “non-ideal configuration” often leads to faltering pilots and increased churn risk.
- Stalled Momentum: Without the flexibility to offer incentives, your sales team loses the ability to guide customers toward an expansion path of mutual value.. This weakens upselling and cross-selling momentum.
2. The Deception of “Discounting without discounting”
Knowing they’ll be faced with discounting during negotiations, this approach involves building anticipated concessions into your strategy—for example, doubling markups for enterprise deals or creating secret regional price lists. In a world where B2B buyers are more informed than ever, this is a high-stakes gamble. Today’s purchasers use platforms like G2, social media, and professional networks to trade notes on what they actually paid. Nontransparent and manipulative discounting is a dangerous practice that corrodes relationship trust and can permanently tarnish your brand reputation.
3. The Chaos of “Case-by-Case Discounting
The most frequent blunder we observe is discounting on an ad-hoc, discretionary basis. Driven by a desperate mantra of “never lose a deal on price,” companies give salespeople free rein to cut whatever deal is necessary to close the month.
The Consequences of Chaos
- Indefensible Price Discrepancies: When two similar customers realize they paid vastly different prices for the same configuration, your credibility evaporates.
- Loss of Negotiating Leverage: If a buyer knows a peer received a 55% discount, your salesperson can no longer claim in good faith that such a discount is against company guidelines.
- Revenue Leakage: Discretionary discounting results in wide margin swings—often as much as 60 points—which makes revenue forecasting nearly impossible.
The Path to Continuous Monetization: Earned, Not Given
Now that you know which approaches to avoid, you’re ready to learn how to apply discounting productively to encourage desirable customer behavior and drive better results.
To escape these traps, software leaders must move toward Market Fairness Pricing. This systematic approach is built on the principle that buyers purchasing the same set of products and services at the same volume should pay the same price. It does not mean everyone pays the same price; Rather, sophisticated and savvy packaging helps segment buyers into unique product and service offerings that have different prices.
Successful discounting is not random; it is systematic and strategic. You must establish a framework of structured incentives where discounts are earned, never given. These might include rewards for:
- Purchase Volume: Pre-defined tiers where the unit price scales rationally.
- Payment Terms: Incentives for upfront annual or multi-year payments.
- Contract length: Incentives for length of term commitments.
- Bundling: Encouraging customers to adopt multiple related products.
By replacing “haggling over price” with “configuring for value,” you accelerate deal velocity and build a high-trust sales culture.
Using Technology to Reinforce Discipline
Moving from chaos to a disciplined strategy requires more than just a spreadsheet—it requires real-time visibility. Our pricing simulation platform, LevelSetter, transforms pricing from a static ruleset into a dynamic growth engine. LevelSetter allows your team to:
- Simulate Licensing, Packaging and Pricing Scenarios: Predict how price changes will impact legacy and net new revenue before you roll them out.
- Empower Sales: Build “pricing fluency” in your reps, giving them the data and confidence to explain the rationale behind your pricing and defend its integrity.
- Monitor Adherence: Use real-time dashboards to ensure sales teams are achieving scheduled net prices and identifying revenue leaks instantly.
